How can the independent C-Store improve sales forecasts?
These six tips will make your sales forecasts more accurate.
Some time ago, a gentleman who wanted help selling his business approached me. I asked him: “So, what purchase price do you expect? He looked at me and said, “5 million dollars. I then asked, “How did you find that number?” He looked at me and said with a straight face, “That’s a nice round number.” I paused and said, “So $100 million.”
The point of the story is that he had no idea how much his business was worth and the $5 million figure was a guess. I compare this story to several sales forecasts I regularly encounter that are daisy-chains, round numbers, or guesses. Anyone can come up with a number – the question is whether it’s legit or vaporware. Here are some tips to consider that will make your sales forecast much more accurate than a “good round number.”
It’s basic math: In order to come up with a number – say, $50,000 in sales for the month – a sales rep needs to have several predicted customers that total $50,000. It’s not rocket science, but I am amazed at how often this simple premise is not followed. This simple exercise separates the liability of the seller from the claimants.
Develop a sales model: Most likely, at the start of the sales year, an annualized target sales number was developed to track sales by customer by salesperson (and maybe even by month). A second element of the sales model should be a month-by-month forecast section designed to be updated throughout the year as new information is learned.
Daily Sale Flash: The Daily Sales Flash is a communication tool that provides a daily reminder of the overall monthly objectives for each salesperson. This Daily Flash keeps your sales targets front and center with the entire team, and projected shortfalls can be addressed throughout the month instead of being known at the end of the month.
Forward forecast: Likewise, the sales model can help the team identify gaps in the overall annual plan well in advance. Tell me I have a projected annualized overall deficit in May, so I have seven months to create a plan to close the deficit instead of not recognizing it until the fourth quarter.
Develop routines: Holding each salesperson accountable for their forecast requires milestone discussions throughout the year. I like to schedule one-on-one meetings with each salesperson at the end of the month so we can discuss the current month to see how we’re doing compared to forecast. In the middle of the month, I meet collectively with the sales team to discuss our group sales activities.
Peer pressure: Finally, good old-fashioned peer pressure can motivate each salesperson to achieve their individual goals in addition to contributing positively to the overall team goal. Communicating business accomplishments throughout the month helps create an inspirational message to the whole team that positive efforts are appreciated.
Sales forecasting is not difficult. In fact, what I’ve described above is very, very basic, and yet I’m surprised how often these practices are simply not followed. While there always seems to be a rush of technology to solve all of our problems, sometimes you need to have the basics in place to reap the benefits of these tools.
John Matthews is responsible for managing all consulting activities for Gray Cat Enterprises Inc., which include retail consulting for multi-unit operations; interim executive management; and project management. Prior to founding his own company in 2004, Matthews held leadership positions as President of Jimmy John’s Gourmet Sandwiches and as Vice President of Marketing, Merchandising, Facilities, Corporate Communications and real estate at Clark Retail Enterprises, Inc. In addition, Matthews worked for nine years in marketing management as National Director of Marketing for Little Caesars Pizza Corporation.